Emirates Development Bank and Etihad Credit Insurance join forces to launch pioneering co-cover scheme to boost UAE priority sectors

Abu Dhabi, United Arab Emirates, 28 May 2024: Emirates Development Bank ("EDB" or "the Bank"), the key financial engine of economic development and industrial advancement in the UAE, and Etihad Credit Insurance (ECI), the UAE Federal export credit company, have entered into a strategic partnership to introduce a pioneering Co-Cover Scheme. This scheme is designed to enhance trade credit support and boost liquidity for SMEs and larger enterprises within the UAE’s thriving manufacturing, renewables, food security, advanced technology, and healthcare sectors.

The innovative Co-Cover initiative aligns with EDB’s mission of fostering a healthy, sustainable, and self-reliant economy, as well as its mandate to provide AED 30 billion in financing to support 13,500 companies within those five sectors. Additionally, it synergies with ECI’s expertise, building upon its mandate of supporting local businesses, fostering economic growth, and promoting exports of goods ‘Made in the UAE’.

The new partnership agreement, signed during the Make it in the Emirates (MIITE) forum, highlights a shared commitment between EDB and ECI to facilitate comprehensive financing solutions that address the unique needs of these critical industries. By combining ECI’s non-payment insurance with EDB’s Credit Guarantee Scheme, this collaboration empowers local banks to provide targeted support for SMEs operating in these key sectors.

The Co-Cover Scheme is poised to deliver a significant boost to the UAE’s economic landscape by ensuring that companies engaged in exports within high-priority sectors have the necessary support to scale operations, innovate, and compete on a global stage. It particularly focuses on enhancing the bankability of projects and reducing financial risk, thereby encouraging more ambitious and large-scale projects within the designated sectors.

Commenting on the announcement, His Excellency Ahmed Mohamed Al Naqbi, Chief Executive Officer of EDB, said: “This collaboration with Etihad Credit Insurance marks a significant step forward in our mission to accelerate the UAE’s advancement across priority sectors. The new Co-Cover Scheme builds upon our existing support programs by providing businesses with more robust financial security and competitive solutions for their exports. This partnership will be instrumental in driving forward the national vision for a diversified, high-tech economy.”

Her Excellency Raja Al Mazrouei, Chief Executive Officer of ECI, emphasised the significance of such strategic partnerships to further the UAE’s economic goals in line with the directives of the wise leadership to solidify the country’s stature as a premier trade and investment hub, both regionally and globally. “We are pleased to collaborate with Emirates Development Bank as it resonates with our commitment to provide tailored financial solutions that spur development, enhance competitiveness, and propel the UAE towards sustainable prosperity. Through this collaboration, we aim to empower SMEs and larger enterprises across vital sectors, driving economic growth and diversifying in alignment with the ‘We the UAE 2031’ vision to achieve a non-oil foreign trade target of AED 4 trillion,” H.E. Al Mazrouei added.

The announcement at MIITE underscores the strategic alignment between EDB’s financing initiatives and the UAE government’s broader economic goals, demonstrating a proactive approach to fostering an environment conducive to industrial innovation and sustainable development. It builds upon EDB's Credit Guarantee Scheme, which plays a crucial role in mitigating the risks associated with lending to SMEs by providing partial credit guarantees to partner commercial banks, and ECI’s non-payment insurance.

This reduces the perceived risk for lenders and encourages them to extend financing to SMEs. The Co-Cover Scheme is designed to enhance the creditworthiness of SMEs by covering a significant percentage of the potential default on loans issued by participating banks. The co-cover can reach up to 80% of the loan amount, thereby sharing the risk between EDB, ECI,  and the partner commercial banks.